Financial Mathematics: Interest Rates, Annuities, and Present Value, Quizzes of Financial Accounting

Download Financial Mathematics: Interest Rates, Annuities, and Present Value and more Quizzes Financial Accounting in PDF only on Docsity! TERM 1 effective interest rate formula DEFINITION 1 net interest cost divided by the net available proceeds TERM 2 net available proceeds DEFINITION 2 loan minus the increase in the compensating balance TERM 3 net interest cost DEFINITION 3 gross interest cost minus the incremental interest revenue TERM 4 gross interest cost DEFINITION 4 loan amount x annual rate x(6 months/12 months) TERM 5 incremental interest revenue DEFINITION 5 balance in the account(checking) x annual rate of account x (6months/12 months) TERM 6 interest factor for future value of a present sum DEFINITION 6 (the amount invested for a period of time/the present value of that amount invested after a period of time)x the amount invested for that period of time. TERM 7 annuity due DEFINITION 7 the first annuity payment is due immediately-According to GAAP, an interest rate must be imputed to arrive at the present value of the machinery. TERM 8 ordinary annuity DEFINITION 8 each payment is due at the end of the period TERM 9 cost of machine to entity of year 1 DEFINITION 9 is the present value of the payment to be made on 9/1/year 3. TERM 10 Compute present value DEFINITION 10 todays price, the future payment is multiplied by the present value of 1 dollar for two periods at 10 percent